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Chapter 6 - Statistical Quality

Control
Operations Management
by
R. Dan Reid & Nada R. Sanders
4th Edition Wiley 2010
Wiley 2010 2
Learning Objectives
Describe categories of SQC
Explain the use of descriptive statistics
in measuring quality characteristics
Identify and describe causes of
variation
Describe the use of control charts
Identify the differences between x-bar,
R-, p-, and c-charts
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Learning Objectives cont
Explain process capability and process
capability index
Explain the concept six-sigma
Explain the process of acceptance sampling
and describe the use of OC curves
Describe the challenges inherent in
measuring quality in service organizations
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Three SQC Categories
Statistical quality control (SQC): the term used to describe the set
of statistical tools used by quality professionals; SQC
encompasses three broad categories of:
1. Statistical process control (SPC)
2. Descriptive statistics include the mean, standard
deviation, and range
Involve inspecting the output from a process
Quality characteristics are measured and charted
Helps identify in-process variations
3. Acceptance sampling used to randomly inspect a batch of
goods to determine acceptance/rejection
Does not help to catch in-process problems

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Sources of Variation
Variation exists in all processes.
Variation can be categorized as either:
Common or Random causes of variation, or
Random causes that we cannot identify
Unavoidable, e.g. slight differences in process variables
like diameter, weight, service time, temperature
Assignable causes of variation
Causes can be identified and eliminated: poor employee
training, worn tool, machine needing repair

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Descriptive Statistics
Descriptive Statistics include:

The Mean- measure of
central tendency
The Range- difference
between largest/smallest
observations in a set of data

Standard Deviation
measures the amount of data
dispersion around mean
Distribution of Data shape
Normal or bell shaped or
Skewed







n
x
x
n
1 i
i
=
=
( )
1 n
X x

n
1 i
2
i

=

=
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Distribution of Data
Normal distributions

Skewed distribution

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SPC Methods-Developing
Control Charts
Control Charts (aka process or QC charts) show sample data plotted on
a graph with CL, UCL, and LCL
Control chart for variables are used to monitor characteristics that can
be measured, e.g. length, weight, diameter, time
Control charts for attributes are used to monitor characteristics that
have discrete values and can be counted, e.g. % defective, # of flaws
in a shirt, etc.



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Setting Control Limits
Percentage of values
under normal curve

Control limits balance
risks like Type I error

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Control Charts for Variables
Use x-bar and R-bar
charts together
Used to monitor
different variables
X-bar & R-bar Charts
reveal different
problems
Is statistical control on
one chart, out of control
on the other chart? OK?

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Control Charts for Variables
Use x-bar charts to monitor the
changes in the mean of a process
(central tendencies)
Use R-bar charts to monitor the
dispersion or variability of the process
System can show acceptable central
tendencies but unacceptable variability or
System can show acceptable variability
but unacceptable central tendencies
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x x
x x
n 2 1
z x LCL
z x UCL
sample each w/in ns observatio of # the is
(n) and means sample of # the is ) ( where
n

,
...x x x
x x
=
+ =
=
+ +
=
k
k
Constructing an X-bar Chart: A quality control inspector at the Cocoa
Fizz soft drink company has taken three samples with four observations
each of the volume of bottles filled. If the standard deviation of the
bottling operation is .2 ounces, use the below data to develop control
charts with limits of 3 standard deviations for the 16 oz. bottling operation.
Center line and control limit
formulas
Time 1 Time 2 Time 3
Observation 1 15.8 16.1 16.0
Observation 2 16.0 16.0 15.9
Observation 3 15.8 15.8 15.9
Observation 4 15.9 15.9 15.8
Sample
means (X-bar)
15.875 15.975 15.9
Sample
ranges (R)
0.2 0.3 0.2
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Solution and Control Chart (x-bar)
Center line (x-double bar):



Control limits for3 limits:

15.92
3
15.9 15.975 15.875
x =
+ +
=
15.62
4
.2
3 15.92 z x LCL
16.22
4
.2
3 15.92 z x UCL
x x
x x
=
|
|
.
|

\
|
= =
=
|
|
.
|

\
|
+ = + =
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X-Bar Control Chart
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Control Chart for Range (R)
Center Line and Control Limit
formulas:
Factors for three sigma control limits

0.0 0.0(.233) R D LCL
.53 2.28(.233) R D UCL
.233
3
0.2 0.3 0.2
R
3
4
R
R
= = =
= = =
=
+ +
=
Factor for x-Chart
A2 D3 D4
2 1.88 0.00 3.27
3 1.02 0.00 2.57
4 0.73 0.00 2.28
5 0.58 0.00 2.11
6 0.48 0.00 2.00
7 0.42 0.08 1.92
8 0.37 0.14 1.86
9 0.34 0.18 1.82
10 0.31 0.22 1.78
11 0.29 0.26 1.74
12 0.27 0.28 1.72
13 0.25 0.31 1.69
14 0.24 0.33 1.67
15 0.22 0.35 1.65
Factors for R-Chart
Sample Size
(n)
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R-Bar Control Chart
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Second Method for the X-bar Chart Using
R-bar and the A2 Factor
Use this method when sigma for the process
distribution is not know
Control limits solution:


( )
( ) 15.75 .233 0.73 15.92 R A x LCL
16.09 .233 0.73 15.92 R A x UCL
.233
3
0.2 0.3 0.2
R
2
x
2
x
= = =
= + = + =
=
+ +
=
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Control Charts for Attributes
P-Charts & C-Charts
Attributes are discrete events: yes/no or pass/fail
Use P-Charts for quality characteristics that are discrete
and involve yes/no or good/bad decisions
Number of leaking caulking tubes in a box of 48
Number of broken eggs in a carton

Use C-Charts for discrete defects when there can be
more than one defect per unit
Number of flaws or stains in a carpet sample cut from a production
run
Number of complaints per customer at a hotel
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P-Chart Example: A production manager for a tire company has
inspected the number of defective tires in five random samples
with 20 tires in each sample. The table below shows the number of
defective tires in each sample of 20 tires. Calculate the control
limits.
Sample Number
of
Defective
Tires
Number of
Tires in
each
Sample
Proportion
Defective
1 3 20 .15
2 2 20 .10
3 1 20 .05
4 2 20 .10
5 2 20 .05
Total 9 100 .09
Solution:

( )
( ) 0 .102 3(.064) .09 z p LCL
.282 3(.064) .09 z p UCL
0.64
20
(.09)(.91)
n
) p (1 p

.09
100
9
Inspected Total
Defectives #
p CL
p
p
p
= = = =
= + = + =
= =

=
= = = =
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P- Control Chart
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C-Chart Example: The number of weekly customer
complaints are monitored in a large hotel using a
c-chart. Develop three sigma control limits using the
data table below.
Week Number of
Complaints
1 3
2 2
3 3
4 1
5 3
6 3
7 2
8 1
9 3
10 1
Total 22
Solution:

0 2.25 2.2 3 2.2 c c LCL
6.65 2.2 3 2.2 c c UCL
2.2
10
22
samples of #
complaints #
CL
c
c
= = = =
= + = + =
= = =
z
z
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C- Control Chart
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Process Capability
Product Specifications
Preset product or service dimensions, tolerances: bottle fill might be 16 oz.
.2 oz. (15.8oz.-16.2oz.)
Based on how product is to be used or what the customer expects
Process Capability Cp and Cpk
Assessing capability involves evaluating process variability relative to preset
product or service specifications
Cp assumes that the process is centered in the specification range


Cpk helps to address a possible lack of centering of the process




6
LSL USL
width process
width ion specificat
Cp

= =
|
.
|

\
|

=
3
LSL
,
3
USL
min Cpk
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Relationship between Process
Variability and Specification Width
Three possible ranges for Cp

Cp = 1, as in Fig. (a), process
variability just meets
specifications

Cp 1, as in Fig. (b), process not
capable of producing within
specifications

Cp 1, as in Fig. (c), process
exceeds minimal specifications


One shortcoming, Cp assumes
that the process is centered on
the specification range

Cp=Cpk when process is centered




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Computing the Cp Value at Cocoa Fizz: 3 bottling machines
are being evaluated for possible use at the Fizz plant. The
machines must be capable of meeting the design
specification of 15.8-16.2 oz. with at least a process
capability index of 1.0 (Cp1)
The table below shows the information
gathered from production runs on each
machine. Are they all acceptable?

Solution:
Machine A


Machine B

Cp=

Machine C

Cp=

Machine USL-LSL 6
A .05 .4 .3
B .1 .4 .6
C .2 .4 1.2
1.33
6(.05)
.4
6
LSL USL
Cp = =

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Computing the Cpk Value at Cocoa Fizz
Design specifications call for a
target value of 16.0 0.2 OZ.
(USL = 16.2 & LSL = 15.8)
Observed process output has now
shifted and has a of 15.9 and a
of 0.1 oz.




Cpk is less than 1, revealing that
the process is not capable






.33
.3
.1
Cpk
3(.1)
15.8 15.9
,
3(.1)
15.9 16.2
min Cpk
= =
|
|
.
|

\
|
=
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6 Sigma versus 3 Sigma
In 1980s, Motorola coined
six-sigma to describe their
higher quality efforts
Six-sigma quality standard is
now a benchmark in many
industries
Before design, marketing ensures
customer product characteristics
Operations ensures that product
design characteristics can be met
by controlling materials and
processes to 6 levels
Other functions like finance and
accounting use 6 concepts to
control all of their processes
PPM Defective for 3
versus 6 quality

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Acceptance Sampling
Defined: the third branch of SQC refers to the process of
randomly inspecting a certain number of items from a
lot or batch in order to decide whether to accept or
reject the entire batch
Different from SPC because acceptance sampling is performed
either before or after the process rather than during
Sampling before typically is done to supplier material
Sampling after involves sampling finished items before shipment
or finished components prior to assembly
Used where inspection is expensive, volume is high, or
inspection is destructive


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Acceptance Sampling Plans
Goal of Acceptance Sampling plans is to determine the criteria for
acceptance or rejection based on:
Size of the lot (N)
Size of the sample (n)
Number of defects above which a lot will be rejected (c)
Level of confidence we wish to attain
There are single, double, and multiple sampling plans
Which one to use is based on cost involved, time consumed, and cost of
passing on a defective item
Can be used on either variable or attribute measures, but more
commonly used for attributes
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Operating Characteristics (OC)
Curves
OC curves are graphs which show
the probability of accepting a lot
given various proportions of
defects in the lot
X-axis shows % of items that are
defective in a lot- lot quality
Y-axis shows the probability or
chance of accepting a lot
As proportion of defects
increases, the chance of
accepting lot decreases
Example: 90% chance of
accepting a lot with 5%
defectives; 10% chance of
accepting a lot with 24%
defectives

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AQL, LTPD, Consumers Risk ()
& Producers Risk ()
AQL is the small % of defects that
consumers are willing to accept;
order of 1-2%
LTPD is the upper limit of the
percentage of defective items
consumers are willing to tolerate
Consumers Risk () is the chance
of accepting a lot that contains a
greater number of defects than the
LTPD limit; Type II error
Producers risk () is the chance a
lot containing an acceptable quality
level will be rejected; Type I error

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Developing OC Curves
OC curves graphically depict the discriminating power of a sampling plan
Cumulative binomial tables like partial table below are used to obtain
probabilities of accepting a lot given varying levels of lot defectives
Top of the table shows value of p (proportion of defective items in lot), Left
hand column shows values of n (sample size) and x represents the cumulative
number of defects found

Table 6-2 Partial Cumulative Binomial Probability Table (see Appendix C for complete table)
Proportion of Items Defective (p)
.05 .10 .15 .20 .25 .30 .35 .40 .45 .50
n x
5 0 .7738 .5905 .4437 .3277 .2373 .1681 .1160 .0778 .0503 .0313
Pac 1 .9974 .9185 .8352 .7373 .6328 .5282 .4284 .3370 .2562 .1875
AOQ .0499 .0919 .1253 .1475 .1582 .1585 .1499 .1348 .1153 .0938
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Example: Constructing an OC Curve
Lets develop an OC curve for a
sampling plan in which a sample
of 5 items is drawn from lots of
N=1000 items
The accept /reject criteria are set
up in such a way that we accept a
lot if no more that one defect
(c=1) is found
Using Table 6-2 and the row
corresponding to n=5 and x=1
Note that we have a 99.74%
chance of accepting a lot with 5%
defects and a 73.73% chance
with 20% defects

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Average Outgoing Quality (AOQ)
With OC curves, the higher the quality
of the lot, the higher is the chance that
it will be accepted
Conversely, the lower the quality of
the lot, the greater is the chance that
it will be rejected
The average outgoing quality level of
the product (AOQ) can be computed as
follows: AOQ=(Pac)p
Returning to the bottom line in Table
6-2, AOQ can be calculated for each
proportion of defects in a lot by using
the above equation
This graph is for n=5 and x=1 (same
as c=1)
AOQ is highest for lots close to 30%
defects
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Implications for Managers
How much and how often to inspect?
Consider product cost and product volume
Consider process stability
Consider lot size
Where to inspect?
Inbound materials
Finished products
Prior to costly processing
Which tools to use?
Control charts are best used for in-process production
Acceptance sampling is best used for inbound/outbound

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SQC in Services
Service Organizations have lagged behind manufacturers in
the use of statistical quality control
Statistical measurements are required and it is more difficult
to measure the quality of a service
Services produce more intangible products
Perceptions of quality are highly subjective
A way to deal with service quality is to devise quantifiable
measurements of the service element
Check-in time at a hotel
Number of complaints received per month at a restaurant
Number of telephone rings before a call is answered
Acceptable control limits can be developed and charted
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Service at a bank: The Dollars Bank competes on customer service and
is concerned about service time at their drive-by windows. They recently
installed new system software which they hope will meet service
specification limits of 52 minutes and have a Capability Index (Cpk) of
at least 1.2. They want to also design a control chart for bank teller use.
They have done some sampling recently (sample size: 4
customers) and determined that the process mean has
shifted to 5.2 with a Sigma of 1.0 minutes.





Control Chart limits for 3 sigma limits





1.2
1.5
1.8
Cpk
3(1/2)
5.2 7.0
,
3(1/2)
3.0 5.2
min Cpk
= =
|
|
.
|

\
|
=
1.33
4
1.0
6
3 - 7
6
LSL USL
Cp =
|
|
.
|

\
|
=

minutes 6.5 1.5 5.0

4
1
3 5.0 z X UCL x x = + =
|
|
.
|

\
|
+ = + =
minutes 3.5 1.5 5.0
4
1
3 5.0 z X LCL x x = =
|
|
.
|

\
|
= =
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SQC Across the Organization
SQC requires input from other organizational
functions, influences their success, and used in
designing and evaluating their tasks
Marketing provides information on current and future
quality standards
Finance responsible for placing financial values on
SQC efforts
Human resources the role of workers change with
SQC implementation. Requires workers with right skills
Information systems makes SQC information
accessible for all.
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Chapter 6 Highlights
SQC refers to statistical tools t hat can be sued by quality
professionals. SQC an be divided into three categories:
traditional statistical tools, acceptance sampling, and
statistical process control (SPC).
Descriptive statistics are used to describe quality
characteristics, such as the mean, range, and variance.
Acceptance sampling is the process of randomly inspecting
a sample of goods and deciding whether to accept or
reject the entire lot. Statistical process control involves
inspecting a random sample of output from a process and
deciding whether the process in producing products with
characteristics that fall within preset specifications.

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Chapter 6 Highlights cont
Two causes of variation in the quality of a product or
process: common causes and assignable causes. Common
causes of variation are random causes that we cannot
identify. Assignable causes of variation are those that can
be identified and eliminated.
A control chart is a graph used in SPC that shows whether
a sample of data falls within the normal range of variation.
A control chart has upper and lower control limits that
separate common from assignable causes of variation.
Control charts for variables monitor characteristics that can
be measured and have a continuum of values, such as
height, weight, or volume. Control charts fro attributes
are used to monitor characteristics that have discrete
values and can be counted.

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Chapter 6 Highlights cont
Control charts for variables include x-bar and R-charts. X-
bar charts monitor the mean or average value of a product
characteristic. R-charts monitor the range or dispersion of
the values of a product characteristic. Control charts for
attributes include p-charts and c-charts. P-charts are used
to monitor the proportion of defects in a sample, C-charts
are used to monitor the actual number of defects in a
sample.
Process capability is the ability of the production process
to meet or exceed preset specifications. It is measured by
the process capability index C
p
which is computed as the
ratio of the specification width to the width of the process
variable.

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Chapter 6 Highlights cont
The term Six Sigma indicates a level of quality in
which the number of defects is no more than 2.3
parts per million.
The goal of acceptance sampling is to determine
criteria for the desired level of confidence.
Operating characteristic curves are graphs that
show the discriminating power of a sampling plan.
It is more difficult to measure quality in services
than in manufacturing. The key is to devise
quantifiable measurements for important service
dimensions.

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The End
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